News conference following state visit to Turkey

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President of Russia Vladimir Putin: Mr President, ladies and gentlemen,

I would like to confirm that the talks during my state visit to Turkey were held in an exceedingly friendly and cooperative atmosphere. We had a substantive discussion with Turkish President Mr ErdoganErdogan Recep TayyipPresident of Turkey and then held a rather productive session of the High-Level Cooperation Council.

We had a detailed conversation about a wide range of issues in Russian-Turkish cooperation, which has taken the form of a productive, multidimensional partnership. As you saw, a solid package of documents was signed.

Turkey is one of Russia’s leading trade partners. In turn, our nation is in second place among Turkey’s foreign trade partners after Germany. Trade turnover is growing, and we have overcome the negative trends of the last year. Although it was small (half a percent), our trade nevertheless grew this year.

Mutual investments are also growing. We agreed that our governments will work on specific measures to bolster mutual trade flows.

We consider energy an important area in our bilateral cooperation. Our relations in this sector have reached a truly strategic level. Russia is currently the biggest fuel exporter to the Turkish market, as Mr President just stated. We supply not only gas, but significant volumes of oil and petroleum products as well. We have reached an agreement on the expansion by Gazprom of the Blue Stream pipeline’s capacity to meet the growing energy demands of the Turkish economy. Following our Turkish friends’ request, we will soon increase supplies to the Turkish market by another 3 billion cubic metres.

Now, a few words about the major South Stream project on the bottom of the Black Sea. We are grateful to our Turkish friends that although Turkey did not benefit directly from this project, it nevertheless gave all the permits necessary to build this pipeline system through Turkey’s exclusive economic zone in a timely manner.

At the same time, taking into account the European Commission’s position, which is not conducive to implementing this project, taking into account the fact that we have only recently received permission from relevant authorities in the Netherlands – granted, it was a positive decision, and taking into account that we still have not received permission from Bulgaria, we feel Russia cannot continue implementing this project under the existing circumstances.

I mean that we now need to start the construction of this pipeline in the Black Sea, but we cannot do that until we have Bulgaria’s permission. I think it’s clear to everyone that it would be ridiculous to start the construction in the sea, reach the Bulgarian shore and stop. So we are forced to reconsider our participation in this project. But given Turkey’s growing demand, we are ready to not only expand the Blue Stream pipeline, as I just said, but also build another pipeline system in order to cover the growing needs of the Turkish economy. And if it is deemed expedient, we can build an additional gas hub for the South European consumers on Turkish territory, near the border with Greece.

In addition, President Erdogan and I agreed that following a request from our Turkish partners and given the expansion of cooperation in the oil and gas sector, we will reduce prices for the “blue fuel” from January 1 for our Turkish consumers by 6%. And we will be ready to reduce these prices further as we implement our major joint projects.

Cooperation to construct a nuclear power plant has already been mentioned. In this regard, I would like to note that the Russian company Rosatom is not only building a facility in Turkey – a nuclear power plant – but is creating an entire sector. This concerns scientific research and training Turkish personnel. Even now, two hundred students from Turkey who are pursuing relevant areas of study are training in Russia. And in the future, of course, it will be possible to train personnel for this sector in Turkey.

We are developing our relationship in the credit and financial sector and feel that broadening trade using national currencies is quite important: we will strive to achieve this in various ways and promote operations of corresponding financial institutions both in Turkey and Russia.

We are also working in the high-tech sector and modern economy: Yandex, the Russian search engine, is broadening its online presence in Turkish.

We are working in the iron and steel industry, the automotive industry and the consumer goods industry.

Russia and Turkey are interested in creating promising joint ventures in transport and infrastructure. Turkish companies have been successfully working in the Russian construction market for over two decades. In implementing the Winter Olympics project in Sochi, Turkish companies performed construction works worth in total over $3 billion. We expect that the Turkish companies’ experience will be used in building sports facilities and infrastructure in preparation for the 2018 FIFA World Cup.

We are strengthening contacts in the culture and humanitarian sector. We will promote public forums on both sides as we consider them very important. Direct contacts between our people are achieved through the growing flow of tourists from Russia to Turkey. Russian tourists are now in first place among Turkey’s visitors, with 4.5 million people visiting this country every year. I am sure the figures will only grow – and these are not even the most recent figures.

We plan to hold reciprocal Years of Tourism in our nations in 2016, first in Turkey and then in Russia. We feel that this is exceedingly important.

We will support interregional cooperation in various ways.

Mr President just discussed our talks with regard to cooperation on the international arena, and I have nothing to add here. There are matters that we still approach and assess differently. But we have a common, very clear desire to settle all acute crises and we will certainly coordinate our work.

Thank you for your attention.

Question: Mr President, with regard to South Stream, could you please give more details, since this news was unexpected? What will happen to this project as a result – is it being suspended? What are its further prospects: will it become a bilateral Russian-Turkish project? What other options are there?

And if I may, a second, specific question about the nuclear power plant. Why has the implementation of this project been delayed? Will the complicated financial and economic conditions affect its implementation? Thank you.

Vladimir Putin: First of all, with regard to South Stream. We feel that the European Commission’s position was unconstructive. It’s not that the European Commission has helped implement this project – it’s that we see obstacles being created in its implementation. If Europe does not want to implement it, then it will not be implemented.

We will focus our energy resource flows on other regions of the world, including through promotion and accelerated implementation of liquefied natural gas projects. We will promote them in other markets, and Europe will not receive those volumes – at least, from Russia. We feel that this does not correspond to Europe’s economic interests and is detrimental to our cooperation.

But that was our European friends’ choice; there’s nothing special about this; ultimately, they are the buyers and it is their choice. But it makes no sense to start this project now, while we still have not received permission from Bulgaria to bring this project into Bulgaria’s exclusive economic zone, onto its territory, as you yourself understand. Would we invest hundreds of millions of dollars in a project, move across the Black Sea, and stop in front of the Bulgarian border? How do our colleagues imagine this? So we will not implement anything. Though the company that was supposed to build it is ready to start works already today, or even yesterday, and everything is ready for it.

Incidentally, my Bulgarian colleagues have always told me that whatever happens, they would certainly implement South Stream, because this corresponds to their national interests. But here, unfortunately, this did not come to pass. If Bulgaria is deprived of the opportunity to act as a sovereign nation, then they should at least demand money from the European Commission to compensate for their lost profits, because direct revenues to Bulgaria’s budget alone would have been no less than 400 million euro a year. But ultimately, this is also the choice of our Bulgarian partners; it seems they have certain obligations. Still, that’s not our business – it’s our partners’ business.

As for Turkey, its consumption is growing. Our Turkish partners generally understand how Turkey’s economy will grow and how much energy it will need. We are ready to provide for it. Moreover, we are ready to expand supplies through Blue Stream and by constructing an additional supply line.

As I already said, if needed, if our relevant agencies and economic actors – BOTAS on the one side and Gazprom on the other – see this possible (and they just signed a memorandum on this very matter today), then they will create a gas hub for southern Europe at the Turkish border with Greece. And everyone who is interested in receiving energy resources from there can go there and buy them.

I repeat, this work requires additional analysis and review. I feel this project is entirely realistic. As we expand our cooperation, we will lower the price for Turkey, as our strategic partner. The first step toward this is lowering the price by 6% from January 1, 2015, and then even more – perhaps by an equal amount, or maybe even greater. This will all depend on how we build our relationship with our partners in this area.

The way we built relations with Germany is that Gazprom has gained access to the network there, so the gas prices are lower than in other European nations. This is a natural choice by our partners. I am confident that we will reach the same level of cooperation with Turkey.

As for the nuclear power plant, this project is unique in that it was the first to be built according to the build-own-operate principle. In other words, Russia, a Russian company, will be the owner of this station. Of course, this is a large investment volume, 20 billion. Russia is not abandoning this project. On the contrary, if the Turkish authorities feel it is expedientand want more than just a power plant, if they want to create a modern sector, then we will be ready to implement that project. We do not see any problems with the deadlines or financing, everything will be implemented as we agreed, and at the highest possible level in terms of safety, because we are providing post-Fukushima safety enhancements.

Question: I have a question to both presidents. You already stated briefly that you discussed the Syrian issue during the talks. It is known that Moscow and Ankara have rather divergent views on settling the Syrian issue, the Syrian problem. Could you tell is in more detail about what you discussed and whether you were able to reconcile your positions?

And another question. You set an ambitious goal to reach $100 billion in bilateral trade turnover by 2020. But can the turbulence of the global economy hinder the political will in reaching this goal? Thank you.

Vladimir Putin: We agree that the situation in Syria cannot be considered normal. We agree that we do not want to allow chaos to reign there and do not want to allow terrorist organisations to grow stronger, as happened in Iraq where, as Mr President stated, nearly 40% of the territory has already been captured by a terrorist organisation. Nobody wants that.

The question is how to create conditions wherein all people living in Syria will have equal access to running the country and will cooperate. Here, of course, we need to find an absolutely acceptable solution, first and foremost, acceptable for the Syrian people themselves, and all the nation’s political forces. We will certainly be in contact with all participants in this process, including our friends in Turkey.

As for trade volume, I can tell you right now that this is not a simple objective given the existing conditions. We have a trade turnover of $33 billion. We spoke about the need to reach $100 billion. Today, our economic development ministers signed corresponding documents and held talks on the conditions that need to be created for further broadening trade and what else can be done to reach a free trade zone agreement. Achieving this status in our trade relations is not easy, but it is possible.

Moreover, we definitely have large reserves even today in areas that have not been developed properly, and unfortunately, are currently up against some bureaucratic hurdles, including on the Russian side. One example is broadening trade in agricultural production. Russia is interested in this, and today, we are ready to open our markets, but there are many current bureaucratic problems that we need to overcome. Naturally, we will work on this. Here, too, we have very large reserves, although these are not investment flows.

I already stated that we have built an iron and steel plant here; Magnitka [Magnitogorsk Iron and Steel Works] invested $2 billion. Our Turkish partners are opening a timber processing plant in Russia. We have launched an SKD assembly of our vehicles. We have work to do, and all this creates good conditions for us to reach, at minimum, the trade level I mentioned.

Question: I have a question for Mr Putin. You already touched on the Syrian issue, and there are differences in Turkey and Russia’s positions. You had a meeting with the Syrian foreign minister, following which certain comments were made. It is saidthere may be a new phase in the Syrian issue. Can we talk about the start of a new phase? Do you insist that Mr Assad should remain in power?

Vladimir Putin: I have already outlined our approach to the situation in Syria. I want to redirect your question on whether we insist that Mr Assad stays in power to the Syrian people. After all, they had elections; people can have different opinions about them, but they showed that Acting President Bashar Assad has fairly significant support among the Syrian people. But we do not feel that the situation is normal. And we talk with the Syrian foreign minister and other Syrian officials about the need to find ways of cooperation that are acceptable to all participants in the political process and all political forces in the nation, ways to stop the bloodshed and civil strife and to join efforts to develop their own nation. That is what we are striving for.

Furthermore, I must say that there are certain technical complications related to the fact that our contacts with the Syrian leadership are limited, for obvious reasons, and we cannot directly affect all these processes, but we will try to do so.